In the long run, an increase in aggregate demand causes the price level to ____ and the long-run aggregate supply curve to ____.
A) decrease; decrease
B) increase; increase
C) decrease; remain unchanged
D) increase; remain unchanged

Question

Quizplus · Accepted Answer

In the long run, an increase in aggregate demand leads to an increase in the price level and does not affect the long-run aggregate supply curve, which is determined by factors such as technology, labor force, and capital stock. Therefore, only option D is correct.

In the Long Run, an Increase in Aggregate Demand Causes